Rolls-Royce (LSE RR.) shares don’t seem to be getting tired of winning. Whether it’s kitting out the planes of the world with modern engines, making breakthroughs on the future of nuclear power with its miniature SMRs, or supplying back-up generators to artificial intelligence titans like Nvidia to keep their energy reliable, it’s been win after win.
But the division that has been thriving the most in these troubled times is Defence. This includes making reactors for submarines or engines for military aircraft. And it seems like March 2026 may have brought another win in this area for the FTSE 100‘s largest manufacturer.
A boost
The latest news concerns the development of Europe’s next generation of fighter jets. The replacement of the current Eurofighter Typhoon planes has fallen onto two projects. The first, an Italy-UK-Japan joint effort, involves the use of Rolls-Royce engines. The second, a collaboration between Germany and France, doesn’t.
What happened? A rift between the Germans and French has put their project on life support. Major German labour unions and aerospace groups have called for Germany to quit the project and join the UK-led one instead.
Rolls-Royce CEO Tufan Erginbilgic had his say on the matter. He said he would welcome Germany joining the project. No wonder, because providing engines for the new fighter jets for the country with the EU’s highest military expenditure could boost earnings for years to come.
While nothing has happened yet, I think this is yet another sign of the strong momentum for Rolls-Royce. This is supported by recent deals with the RAF, the US Navy and Turkey. As defence spending ramps up over the next decade (as it is very much expected to), I suspect we might see many more wins of a similar nature.
Been and gone?
Zooming out a little bit, are Rolls-Royce shares a good buy today? After all, the share price has surged over 10 times in the last few years. Perhaps the time to get in has been and gone?
On valuation terms, I’d say there’s still value here. While a price-to-earnings (P/E) ratio of around 40 looks expensive, it’s worth pointing out that growth in the company means that figure is expected to fall in future. Taking the forecast 2027 earnings, for instance, means the P/E ratio could be around 26 in just a couple of years’ time – buying at today’s share price of course. I don’t think that’s unreasonable for one of the FTSE 100’s most exciting stocks.
In the end? It’s been a succession of earnings beats that have propelled Rolls-Royce to its current FTSE 100 darling status. And if Germany is brought into the next-gen fighter plane project then it could be a recipe for many more to come in the future too. I’d say the stock is worth considering.
